2015 Segal Health Plan Cost Trend Survey Shows Variation in Trend Rates, Substantial Increases for Prescription Drug Plans

NEW YORK--()--Health benefit plan cost trend rates for 2015 are forecast to drop slightly for some coverages, but increase substantially for prescription drug plans, according to data compiled in the 2015 Segal Health Plan Cost Trend Survey, Segal’s 18th annual survey of health plan cost trends.

Key findings include:

  • Increases in medical trends are projected to range from 6.2% for HMOs to 10.4% for fee-for-service coverage.
  • Higher trend rates for all prescription drug benefit plan types. For example, the carve-out trend for retirees 65 and older is projected to rise from 5.7% in 2014 to 7.5% in 2015, more than twice the rate of retiree medical cost trends.
  • Compliance with the ACA out-of-pocket maximum requirement for 2012, which applies to non-grandfathered plans, is expected to increase costs by an average of 1% for medical plans and 1.5% for prescription drug carve-out plans.

“New specialty drugs and price increases for brand-name drugs are the main forces driving prescription drug plan cost trends,” said Edward Kaplan, Segal’s National Health Practice Leader. “Typically, less than 1% of all prescriptions are specialty drug medications, yet these drugs now account for more than 25% of total prescription drug cost trends. The projected specialty drug/biotech trend rate for 2015 is an exceptionally high 19.4%.”

“Forecasts are generally higher than actual experience, as insurers and analysts typically add margin to estimates to cover claim volatility,” added Kaplan. “In 2013, actual trends for managed care plans were the lowest reported in more than 12 years.”

As the health benefits landscape continues to change, Mr. Kaplan says, “Sponsors of large group plans must stay focused on exploring health plan strategies that produce high value medical benefits with stable cost trends. This will help avoid future excise taxes.” He recommends that plan sponsors should:

  • Set appropriate health plan designs, levels of cost sharing and choices;
  • Select network providers with incentives for patients to use the highest value providers by specialty;
  • Consider a reference-based allowance approach;
  • Emphasize prevention, wellness, early detection and improved patient health literacy;
  • Consider a defined contribution approach for actives and/or retirees; and,
  • Reevaluate and potentially reset eligibility rules.

The survey includes data from managed care organizations, health insurers, pharmacy benefit managers and third-party administrators. Complete survey results are available here.

The Segal Group (www.segalgroup.net) is a private, employee-owned consulting firm headquartered in New York and with nearly 1,000 employees throughout the U.S. and Canada. Members of The Segal Group include: Segal Consulting, Sibson Consulting, Segal Select Insurance Services, Inc., and Segal Rogerscasey. In 2014, The Segal Group is celebrating the 75th anniversary of its founding by Martin E. Segal.

Contacts

The Segal Group
Mary L. Feldman, 212-251-5029
Senior Vice President
mfeldman@segalco.com

Contacts

The Segal Group
Mary L. Feldman, 212-251-5029
Senior Vice President
mfeldman@segalco.com